In this issue of Benefit Beat: AGENCIES RELEASE 2013 FORM 5500: FORM M-1 FILERS NOW REQUIRED TO FILE FORM 5500; SAN FRANCISCO’S HCSO: MORE FAQS ON HRAS AND 2014 RESOURCES; MORE LOCAL GOVERNMENTS ENACTING LEAVE LAWS; SOCIAL SECURITY AND MEDICARE TAX REFUNDS FOR SAME-SEX MARRIAGE COUPLES; CONTRIBUTIONS TO SAFE HARBOR 401(K) PLANS

1. December 9, 2013
15
In This Edition:
 AGENCIES RELEASE 2013 FORM
5500: FORM M-1 FILERS NOW
REQUIRED TO FILE FORM 5500
 SAN FRANCISCO’S HCSO: MORE
FAQS ON HRAS AND 2014
RESOURCES
 MORE LOCAL GOVERNMENTS
ENACTING LEAVE LAWS
 SOCIAL SECURITY AND MEDICARE
TAX REFUNDS FOR SAME-SEX
MARRIAGE COUPLES
 CONTRIBUTIONS TO SAFE
HARBOR 401(K) PLANS
AGENCIES RELEASE 2013 FORM 5500: FORM M-1
FILERS NOW REQUIRED TO FILE FORM 5500
The Internal Revenue Service (IRS), Department of
Labor (DOL), and Pension Benefit Guaranty
Corporation (PBGC) have consolidated certain
returns and report forms in an effort to reduce the
filing burden for plan administrators and employers.
These
agencies
have
recently
released
informational copies of the 2013 Form 5500
annual return/report and related instructions.
Of particular note, the 2013 Form 5500 includes a
new section called, “Form M-1 Compliance
Information” that requires certain information to be
completed by plans subject to the Form M-1 filing
requirement. As background, the Form M-1, “Report
for
Multiple
Employer
Welfare
Arrangements
(MEWAs) and Certain Entities Claiming Exception
(ECEs)” is an annual report filed with the DOL that is
used by plans to attest compliance with HIPAA and
related federal laws, as well as the Affordable Care
Act (ACA).
Earlier this year, the DOL issued final regulations
relating to Form M-1 changes required by ACA (see
CBIZ Health Reform Bulletin, Final Rules Relating
to Multiple Employer Welfare Arrangements
and Form M-1, 3/8/13). The ACA strengthens the
regulation of MEWAs primarily by increasing
reporting and disclosure requirements and creating a
cross-reference between the Form M-1 required to
be filed by MEWAs, and the Form 5500 required of
plans subject to ERISA.
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2. Continued from Page 1
And now, the 2013 edition of the Form 5500 is
modified accordingly. Thus, all welfare benefit
plans required to file a Form M-1 are now
required to file the Form 5500 regardless of
the plan size or type of funding. The
exemption from filing for small unfunded, fully
insured, or combination unfunded/fully insured
plans no longer applies to plans required to file
the Form M-1.
According to the Form 5500 Instructions,
affected plans must provide an attachment to
the 5500 filing with “Form M-1 Compliance
Information” clearly marked at the top. The
attachment must indicate whether the plan
was subject to the Form M-1 filing
requirement during the plan year; and if so,
whether it has completed its Form M-1 filing.
In addition, the plan must include its receipt
confirmation code relating to the 2013 Form
M-1 filing.
SAN FRANCISCO’S HCSO: MORE FAQS ON
HRAS AND 2014 RESOURCES
Following last month’s Benefit Beat article
discussion of recent updates relating to San
Francisco’s Health Care Security Ordinance
(HCSO), the Office of Labor Standards
Enforcement (OLSE) posted additional FAQs
specifically addressing Health Reimbursement
Arrangements (HRA).
Of particular note, the OLSE affirms, and
consistent with the Affordable Care Act (ACA),
that funds from a stand-alone HRA contributed
prior to December 31, 2013, and in
accordance with the plan that was in place as
on January 1, 2013, can continue to be used
to satisfy the HCSO obligation.
No new
contributions can be made to a stand-alone
HRA after December 31, 2013.
Generally, an HRA is considered “minimum
essential coverage” as defined by ACA; thus,
disqualifying an individual from governmentprovided premium assistance (available to
qualifying individuals, specifically those who
fall between 100 and 400% of Federal Poverty
Level and who purchase coverage through the
December 9, 2013
marketplace).
The FAQs affirm that an
individual can waive his/her HRA account
balance, i.e., forfeit the funds, to preserve the
right to premium assistance; however, the
HCSO requires that HRA funds be available for
at least 24 months from the date of
contribution, as well as satisfy additional
criteria.
The FAQs affirm that if an individual waives
HRA coverage prior to the exhaustion of 24
months, the employer will not have satisfied
its HCSO obligation; and therefore, the
employer would have to find another way to
satisfy this obligation (see FAQ #3 for
examples of health care expenditure options).
Additional 2014 Resources
The OLSE has made several 2014-related
documents available on their website:
 2014 Official Notice which is
required to be posted at workplaces
beginning January 1, 2014;
 2014 Two-Page HCSO Summary of
Employer Obligations; and the
 2014 Employer Spending
Calculator together with Q&As and
Line-by-Line Instructions for the
2014 Calculator.
In addition, employers covered by the San
Francisco HCSO are also required to submit
an Annual Reporting Form by April 30th each
year. The 2013 Annual Reporting Form is
expected to be available on the OLSE’s
website in March 2014.
MORE LOCAL GOVERNMENTS ENACT
LEAVE LAWS
For several years now, local government
jurisdictions such as cities and municipalities,
have been enacting ordinances or laws that
require private employers doing business in
that particular jurisdiction to provide certain
leave benefits to their employees. Recently,
New York City and the City of Portland,
Oregon have recently passed paid sick leave
ordinances similar to those enacted in Jersey
City, City of Philadelphia, Milwaukee and
Seattle, among others.
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3. NEW YORK CITY
 Earned Sick Time.
Effective April 1,
2014, the New York City Earned Sick Time
Act requires employers employing 20 or
more employees to provide one hour of
paid sick leave for every 30 hours an
employee works. Employers employing 15
or more employees or who employ a
domestic worker are required to provide
paid sick time to their employees
beginning October 1, 2015; until then all
employers employing 15 to 19 employees
are required to provide unpaid sick leave.
Employees eligible for the earned sick time
include those working a minimum of 80
hours per calendar year within the city of
New York on a full or part-time basis. An
employee may use this sick time to care
for his/her own mental or physical illness,
injury or health condition; or to attend to
the medical care of a family member.
 Reasonable Accommodations Relating
to Pregnancy, Childbirth or Related
Medical Conditions. The New York City
Human Rights Law has been expanded to
provide job protections for employees who
need reasonable accommodations relating
to pregnancy, childbirth, or related medical
conditions. This law impacts all businesses
in New York City with four or more
workers, counting both employees and
independent contractors. Employers must
provide reasonable work accommodations
to pregnant women and those who suffer
medical conditions related to pregnancy
and
childbirth.
Such
a
reasonable
accommodation may include bathroom
breaks, leave for a period of disability
arising from childbirth, breaks to facilitate
increased water intake, periodic rest for
those who stand for long periods of time,
and assistance with manual labor. The law
takes effect on January 30, 2014.
PORTLAND, OREGON: PROTECTED SICK TIME
ORDINANCE
Beginning January 1, 2014, employers
employing 6 or more employees are required
to provide at least one hour of paid sick time
December 9, 2013
for every 30 hours of work performed by the
employee within the City of Portland. Those
employers with 5 or fewer employees must
provide a minimum of one hour of unpaid sick
time for every 30 hours of work performed by
the employee within the City.
All employees who work for the employer are
counted for the purposes of determining the
number of employees an employer has,
including full-time employees, temporary
employees,
part-time
employees,
and
employees who work outside the City of
Portland or outside the State of Oregon.
Employees who perform work in the City or
telecommute to the City for work are covered
by the ordinance regardless of where their
employer is located. Employees, who perform
work outside the City, even if the employer is
based in the City, are not covered by the
ordinance for hours worked outside the City.
The employee may use the sick leave in such
instances as to attend to his/her own medical
care or to the medical care of a family
member.
It can also be used following
instances of domestic violence or sexual
assault; as well as following closure of school
or day care as a result of public health
emergencies.
Employers with sick leave or paid time off
policies in place providing comparable benefits
can be deemed to be compliant with the
Ordinance.
SOCIAL SECURITY AND MEDICARE TAX
REFUNDS FOR SAME-SEX MARRIAGE
COUPLES
In September,
the IRS issued guidance
(Notice 2013-61) that provides simplified
procedures for employers to claim refunds or
adjust overpayments of FICA taxes applicable
to certain benefits and remunerations provided
to same-sex spouses (see IRS – Optional
Simplified Methodologies for FICA Claims or
Refunds in our October Benefit Beat article,
More Agency Guidance Issued on SameSex Marriage). Contemporaneous with the
Notice, the IRS posted several FAQs for
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4. Same-Sex Married Couples. Of relevance
to employers, the IRS recently added two new
FAQs (see FAQs 21 and 22) addressing the
refund of Social Security and Medicare taxes.
An employee in a same-sex marriage is
directed first to ask his/her employer for a
refund of over-held Social Security and
Medicare taxes. If the employer indicates that
it will not be seeking the refund, the employee
can file a Form 843, Claim for Refund and
Request for Abatement, marked “Windsor
Claim”.
If an employer is seeking a refund, two
methodologies are provided, as more fully
described in our Benefit Beat article. If the
employer follows the second methodology,
wherein the employee files a Form 941-X for
the full year, the employer must obtain written
confirmation from the affected individual that
he/she will not be seeking a refund on his/her
own merit; this, of course, is to ensure, no
double dipping.
Matters relating to same-sex marriage
continue to evolve and employers are welladvised to work closely with their tax advisors
to ensure compliance.
CONTRIBUTIONS TO
SAFE HARBOR 401(K) PLANS
A number of years ago, a law was passed
allowing a defined contribution plan to be
designed as a safe harbor plan. The benefit of
a safe harbor plan is that the plan is deemed
to
meet
certain
discrimination
tests,
specifically the Actual Deferral Percentage
(ADP) test and the Actual Contribution
Percentage test (ACP) test. In order to qualify
as a safe harbor plan, the plan must comply
with certain design requirements, most
significant of which is making either a safe
harbor matching contribution or a safe harbor
non-elective contribution, which is binding for
the 12-month plan year. In 2009, regulations
were proposed allowing certain circumstances
that the safe harbor contribution could be
suspended due to business hardship (see
401(k) Safe Harbor Plans: Limited Relief,
Benefit Beat, 7/8/09).
December 9, 2013
A few weeks ago, final IRS regulations were
issued clarifying the circumstances under
which
the
safe
harbor
non-elective
contribution could be suspended (also see
related IRS fact sheet, Reducing or
Suspending Safe Harbor 401(k) Matching
and Nonelective Contributions Midyear).
Specifically, the final regulations change
“business hardship” to “economic loss”. For
both the non-elective contributions and
matching contributions, the suspension can
occur if the employer can prove economic loss.
Alternatively, the safe harbor notice which is
required to be provided between 30 and 90
days prior to the first day of the plan year to
which the safe harbor applies, must state that
the plan may be amended to reduce or
suspend
the
non-elective
or
matching
contribution, as applicable. For the matching
contributions, the safe harbor notice rule
applies to plan years beginning on or after
January 1, 2015.
Employers sponsoring a safe-harbor plan may
want to reserve their right to make
modifications in the advanced notice rather
than having to depend on the “economic
hardship” provision. For calendar year plans,
it is too late to make this change for the 2014
plan year, as the safe-harbor notice must have
been issued by the end of November. But,
this could be something to consider for the
2015 plan year.
The information contained in this Benefit Beat is not
intended to be legal, accounting, or other professional
advice, nor are these comments directed to specific
situations. This information is provided as general
guidance and may be affected by changes in law or
regulation. This information is not intended to replace or
substitute for accounting or other professional advice. You
must consult your own attorney or tax advisor for
assistance in specific situations. This information is
provided as-is, with no warranties of any kind. CBIZ shall
not be liable for any damages whatsoever in connection
with its use and assumes no obligation to inform the
reader of any changes in laws or other factors that could
affect the information contained herein. As required by
U.S. Treasury rules, we inform you that, unless expressly
stated otherwise, any U.S. federal tax advice contained
herein is not intended or written to be used, and cannot
be used, by any person for the purpose of avoiding any
penalties that may be imposed by the IRS.
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